PARAMOUNT CORPORATION BHD (1724) PARAMON

Business Summary:

Paramount Corporation Berhad, through its subsidiaries, engages in the property investment business primarily in Malaysia. It operates through four segments: Property investment, Property development, Construction, and Education. Property investment segment engages in the rental of residential and commercial properties. Property development segment develops residential and commercial properties. Construction segment engages in the construction of buildings. This segment also provides engineering services. Education segment operates private educational institutions. Paramount Corporation was incorporated as Malaysia Rice Industries Berhad in 1969 and changed its name to Paramount Corporation Berhad. The company is based in Petaling Jaya, Malaysia.

Property Division

Paramount has earned an excellent reputation as a reliable and quality focused property developer, which attribute has been re-affirmed through Paramount Property (Utara) Sdn Bhd wining the prestigious 12th FIABCI Property Award of Distinction 2004, Residential Development Category for its development, Bandar Laguna Merbok, an upmarket resort style township.

Over the last few years, Paramount has successfully developed the mixed-development townships of Taman Patani Jaya, Taman Sutera and Bandar Laguna Merbok in Sungai Petani by delivering over 1,800 units of properties. All these townships bear testimony to the company progressive approach to property development. Following these successes, the company decided to establish the first property project in Klang Valley under Paramount Property Development Sdn Bhd. Kemuning Utama enjoyed overwhelming success since the project took off. Its innovative and quality products, geared to match purchasers’ requirements saw a take up rate of 99% of its early launches.

As a core business activity, property development will continue to contribute significantly to Paramount’s earnings leveraging on its proven records.

Construction Division:

Paramount Engineering & Construction Sdn Bhd (PECSB) is a construction-based company with activities in civil engineering and building works, and is wholly owned by Paramount Corporation Berhad.

PECSB’s established track record is proof of its commitment to be a long-term player in the construction industry with activities in civil engineering and building works. Over these 16 years, PECSB has been awarded projects amounting to more than RM1.0 billion, and PECSB has achieved remarkable growth in terms of profitability.

PECSB initially concentrated on residential projects in the Northern Region of Malaysia, but has since diversified and expanded its business operations into other areas such as infrastructure, high-rises, schools and other public works in the Klang Valley, Pahang and Melaka.

The Company embraces Quality Management Systems as an integrated and inherent part of its corporate culture to ensure that exacting standards are conscientiously practised. The company attained the MS ISO 9001:2000 certification and this has further enhanced the Company's efficiency and competitiveness.PECSB holds a Grade G7 licence approved by the Construction Industry Development Board Malaysia (CIDB), which permits the Company to undertake an unlimited amount of building works and specialised Civil Engineering projects. Grade G7 is the highest grade of licence issued by the Board.

PECSB also holds a PKK Class A licence, which permits the Company to tender for construction projects awarded by the government for unlimited contract amounts. PECSB has established a solid and close relationship with its suppliers over the years through goodwill and its reputation in the construction industry. This ensures fast and consistent supply of building materials and cement for all its construction projects.

• Tertiary Education

Established in 1983, and a pioneer in Malaysian private education, KDU College has continued to be an innovative leader in being the first SMART college in Malaysia. Through its SMART initiatives, KDU aims to provide a superior learning experience to nurture students to become independent and life-long learners. KDU College Sdn Bhd Bhd has 2 campuses. The two are strategically situated in Petaling Jaya and Penang.

KDU offers a wide range of programmes at Certificate, Diploma, Degree and Masters levels. The Certificate and Diploma courses are internally developed while the Degree and Masters programmes are conducted in association with prestigious universities in Australia and the UK.

• Primary and Secondary Education

The first purpose-built private smart school in Malaysia. Sekolah Sri KDU® was set up by Paramount Corporation Berhad who has a 20 year track record in education with its network of KDU Colleges. Sekolah Sri KDU® is based on the Malaysian Government Blue-Print on Smart Schools and has adopted some of the world's best practices. This provision of high quality primary and secondary education represents our initiative for downstream expansion in the educational sector.

• Executive Learning

The Executive Learning Network defines the unique learning experience at KMDC. Modeled after the best business and executive learning centres in the world, the people at KMDC realize the limitations of the traditional lecture-based learning process. To ensure that learning members are exposed to the absolute learning experience and executive education that goes beyond the framework of theories – and to enable professionals to immediately utilize their enhanced management and leadership capabilities – KMDC provides the most effective learning and professional development solutions.

• Language School

KDU International Language Training School (KILTS) is strategically located at the famous "Three Gorges Square", Shapingba, commonly known as the educational hub of Chongqing and home to about 25 universities. The centre is easily accessible via public transport.

KILTS commenced operations in the fourth quarter of 2004 and achieved an enrollment of 647 students in 2005.

KILTS's emphasis is on quality teaching methodology and materials which are mainly devloped in-house by its academic team comprising experienced English native speakers from New Zealand, United States and United Kingdom. KILTS offers a wide range of programmes, from pre-school to working professional level as well as customised courses for corporations and training on a one-to-one basis. KILTS also offer online programmes in collaboration with ACL English Solutions, an Australian company.

Other Division

Paramount Corporation Berhad (Paramount) is also involved in investment and plantation. Paramount Global Assets Sdn Bhd, Paramount’s investment arm, holds a 20% share in Jerneh Insurance Bhd.

Financial Performance:

Year 2002 2003 2004 2005 2006 Average

ROE 5.72 7.47 7.50 15.54 15.06 10.26 > 10

ROA 4.28 3.86 3.69 8.02 9.35 5.84 <>

Total Liabilities : Equity = 32.30 : 67.70

D/E Ratio = 0.09

P/E ratio = 5.1

DY = 5.56%

Average Revenue Growth Rate = 26.74% (5 years)

Average Earnings Growth Rate = 48.06% (5 years)

Supporting Value:

1. NTA per share (as at 30/9/07) = RM4.08 > RM2.43 (as at 8/1/08)

2. The management level staff especially the director level starting to purchase company share.

3. The increase of the efficiency of the management level. (can also refer to the increasing ROE).

4. Low D/E ratio.

5. Strong cash flow with RM134millions in hand.

6. The group is currently trading at 55% discount to its NTA/share of RM4.08.

7. The group constantly come out with Employee Share Option Scheme in year 2007.

8. Aquisition of more landbank in Klang Valley area.

9. The launch of the new phases (Phase 6 & 8) at Bandar Laguna Merbok, Sungai Petani.

10. The stable growth of 6%-7% of the Education Division, especially the expansion in China market.

Upcoming Projects:

1. The new phase of Bandar Laguna Merbok (Phase 6, Malay Lots).

2. The lauch of the new programes from Education Division.

Conclusion:

Paramount Corporation Berhad is a company with strong cash flow with very low debt ratio. The company currently trading at more than 50% discount to its NTA/share. It also showed an improvement effeciecy of the management team. With the new government policy and project is also a great affect on the property industry in the future. (It can showed from the great respond from the launch of the EPF 2nd account loan payment scheme) As a conclusion, Paramount Corporation Berhad is an undervalue stock in the current market.